🚨 BIG: Last week saw $2.18B in long liquidations. https://t.co/Fm7H6EEw3b ...

Market Overview - Bitcoin (BTC) fell below $110,000, declining over 3%, while Ethereum (ETH) dropped approximately 5% to below $3,900, marking its lowest level since August [1][2] - The broader crypto market experienced significant sell-offs, with over $1.6 billion in long positions liquidated earlier in the week and an additional $511 million liquidated in the past 24 hours [3] Market Sentiment - The downward pressure on prices is attributed to insufficient buying power and a wave of liquidations, which has weakened market sentiment [2] - The decline in crypto prices coincides with corrections in the broader equity market, raising investor concerns about market frothiness driven by AI enthusiasm and uncertainty regarding the Federal Reserve's interest rate path [3] Seasonal Trends - September is noted as a seasonally volatile month for crypto, with the last three months of the year typically providing tailwinds for the market [4] Liquidity Factors - The U.S. Treasury has been refilling its General Account by issuing T-bills and bonds, which acts as a liquidity drain for crypto markets, potentially reducing demand for risk assets like Bitcoin [5] - The decline in crypto prices has also affected crypto-related stocks, with trading platforms like Robinhood and Coinbase each declining over 1% [5]

Market Trends - Market makers are driving long liquidations, indicating potential market instability [1] - The industry advises caution due to the ongoing market dynamics [1]

Crypto Market Crash Causes - Crypto market crashes are often triggered by a combination of bearish macro and crypto catalysts [2] - Leverage in crypto trading amplifies both potential returns and losses, leading to liquidations that drive short-term price action [3][4][5] - Macro catalysts act as fuel, while crypto catalysts act as the spark that ignites market downturns [13] Macro Catalysts - Bearish macro catalysts include higher-than-expected inflation, lower-than-expected unemployment, and the Federal Reserve maintaining high interest rates [19] - Geopolitical risks, especially potential conflicts involving China and Taiwan, pose significant threats to the crypto market due to uncertainty [25][27] - Fiscal policy, particularly government spending and rising deficits, is a primary driver of liquidity growth, overshadowing the impact of monetary policy [22][23][24] Crypto Catalysts - Temporary bearish crypto catalysts often mark cycle bottoms, while permanent bearish catalysts, such as insider token selling, can hinder project performance [34][37] - The shutdown of institutional crypto rails like Signature's Signet and Silvergate Sen networks in early 2023 contributed to the underperformance of altcoins [44][45] - Token unlocks don't always lead to price drops; panic selling by retail investors and lack of demand can be more significant factors [38][39][40][41][43]